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        T R O U B L E D   C O M P A N Y   R E P O R T E R

                    L A T I N   A M E R I C A

             Friday, July 23, 2004, Vol. 5, Issue 145

                            Headlines

A R G E N T I N A

ARTEPOL S.A.: Submits Report, Reschedules Assembly
CARBLANA S.A.: Begins Liquidation Process
CCI: IFC Requests Involuntary Bankruptcy
COORDINACION EN SALUD: Enters Bankruptcy on Court Orders
EMSEL S.A.: Court Orders Liquidation

GRANITO SERRANO: Gears for Reorganization
MARMOLERIA SIERRA CHICA: Reports Submission Set
METROGAS: Extends Solicitation of Debt Restructuring Approval
PRODUCAMP S.A.: Court Appoints Trustee for Reorganization
SOLVENS S.A.: Liquidates Assets to Pay Debts

YESERIA LEZAMA: Enters Bankruptcy on Court Orders


B A R B A D O S

C&W BARBADOS: Regulator Rejects Rates Hike Proposal


B E R M U D A

ANNUITY & LIFE: Clarifies Settlement Amount
GLOBAL CROSSING: Slim Gets Regulatory Clearance to Up Stake


B R A Z I L

EMBRATEL: Reports Earnings for the Quarter Ending June 30, 2004
TCP: Analysts Estimate $12M Net Loss for 2Q04


C H I L E

TELEFONICA CTC: Ratings Unaffected by 2Q04 Results


C O S T A   R I C A

ICE: Government Sacks Two Directors


E C U A D O R

* Fitch Ratings Affirms Ecuador At 'CCC+'; Outlook Stable


H A I T I

* IDB Offers $260M Soft Loans To Support Haiti's Recovery Plan
* Oxfam Warns Against Haiti Taking In More Loans


M E X I C O

CINTRA: IPAB Suspends Bidding Process
DESC: 2Q04 EBITDA Rises 58.1% Compared to 2Q03  
GALEY & LORD: Agrees To Acquisition By Patriarch Partners
GRUPO MEXICO: Workers to Walk Off the Job Friday
HYLSAMEX: Prepays $137M Bank Loan


P A R A G U A Y

COPACO: New Head Names New Senior Management Team


P E R U

AERO CONTINENTE: Transfers Ownership to Employees


U R U G U A Y

BBVA URUGUAY: S&P Ups Ratings Following Sovereign Upgrade
CITIBANK N.A.: S&P Upgrades Ratings to `B' from `B-'
DISCOUNT BANK: Ratings Raised Following Sovereign Upgrade
* S&P Raises Uruguay's Long-Term Ratings to 'B' From 'B-'


V E N E Z U E L A

PDVSA: S&P Says PDVSA Fin Ltd. Notes Cut Probable
PDVSA: Demands an Independent Audit, Arbitration in SAIC Dispute
PDVSA: Explosion at Natural Gas Complex Injures Four

     -  -  -  -  -  -  -  -

=================
A R G E N T I N A
=================

ARTEPOL S.A.: Submits Report, Reschedules Assembly
--------------------------------------------------
The general report submission for the Artepol S.A.
reorganization has been moved to November 4, 2004, reports
Infobae. Likewise, the creditors' informative assembly will be
conducted earlier on November 9, 2004.

Mr. Gustavo Guillermo Vignale serves as trustee on this case
upon the appointment of Judge Vasallo of Buenos Aires Court No.
5.

CONTACT: Artepol S.A.
         Ave Belgrano 634
         Buenos Aires

         Mr. Gustavo Guillermo Vignale, Trustee
         Vuelta de Obligado 2717
         Buenos Aires


CARBLANA S.A.: Begins Liquidation Process
-----------------------------------------
Carblana S.A. of Buenos Aires will begin liquidating its assets
after the city's Court No. 12 declared the company bankrupt.
Infobae reveals that the bankruptcy process will commence under
the supervision of court-appointed trustee, Mr. Norberto Jorge
Volpe.

The trustee will review claims forwarded by the company's
creditors until August 20, 2004. After claims verification, the
trustee will submit the individual reports for court approval on
October 1, 2004. The submission of the general report will
follow on November 12, 2004.

Clerk No. 23 assists the court on this case.

CONTACT: Mr. Norberto Jorge Volpe
         Maipu 859
         Buenos Aires


CCI: IFC Requests Involuntary Bankruptcy
----------------------------------------
The International Finance Corporation (IFC), the World's Bank
private sector arm, has requested the involuntary bankruptcy of
Argentine toll concessionaire CCI Compania de Concesiones de
Infraestructura SA before commercial court 23, secretariat 46 of
the Buenos Aires city.

The IFC was in discussions with CCI over the currency in which a
loan granted by the entity before the devaluation of the
Argentine peso should be repaid. The concessionaire wants to pay
the debt in pesos instead of US dollars.

Back in January 2000, the IFC granted this US$50 million loan in
exchange for a pledge contract on shares equal to 60% of CCI's
capital stock.

The IFC refuses to accept the "pesification" of the debt applied
by CCI based on a law sanctioned after the big default of the
Argentine economy in 2001. Toll fees charged by CCI were also
pesified on this opportunity.

Last month the entity decided to sell the CCI shares by an
extrajudicial auction, but the process was blocked by an action
filed by CCI.


COORDINACION EN SALUD: Enters Bankruptcy on Court Orders
--------------------------------------------------------
Buenos Aires Court No. 21 declared local company Coordinacion en
Salud S.A. bankrupt after the company defaulted on its debt
payments. The bankruptcy order effectively places the company's
affairs as well as its assets under the control of court-
appointed trustee, Ms. Silvana Noemi Cirigliano.

As trustee, Ms. Cirigliano is tasked with verifying the
authenticity of claims presented by the company's creditors. The
verification phase is ongoing until October 25, 2004.

Following claims verification, the trustee will submit the
individual reports based on the forwarded claims on December 6,
2004. A general report will also be submitted on February 16
next year.

Infobae reports that Clerk No. 41 assists the court on this
case, which will end with the disposal of the company's assets
in order to pay its debts.

CONTACT: Ms. Silvana Noemi Cirigliano, Trustee
         San Luis 2488
         Buenos Aires


EMSEL S.A.: Court Orders Liquidation
------------------------------------
Buenos Aires Court No. 12 ordered the liquidation of Emsel S.A.
after the company defaulted on its obligations, Infobae reveals.
The liquidation pronouncement will effectively place the
company's affairs as well as its assets under the control of Mr.
Luis Ricardo Kralj, the court-appointed trustee.

Mr. Kralj will verify creditors' proofs of claims until
September 3, 2004. These claims will serve as basis for the
individual reports to be submitted in court on October 15, 2004.
The submission of the general report follows on November 26,
2004.

Clerk No. 23 assists the court on this case, which will end with
the disposal of the company's assets in favor of its creditors.

CONTACT: Mr. Luis Ricardo Kralj, Trustee
         Bouchard 468
         Buenos Aires


GRANITO SERRANO: Gears for Reorganization
-----------------------------------------
Olavarria Court No. 2 issued a resolution opening the
reorganization of Granito Serrano S.A., says Infobae. This
pronouncement authorizes the Company to begin drafting a
settlement proposal with its creditors in order to avoid
liquidation.

The reorganization also allows the Company to retain control of
its assets subject to certain conditions imposed by Argentine
law and the oversight of the court appointed trustee.

Mr. Rodolfo Marcelo Prat will serve as trustee during the course
of the reorganization. He will be validating creditors' proofs
of claims until September 7, 2004. The results of the
verification will be presented in court as individual reports on
October 20, 2004.

The trustee is also obligated to provide the court with a
general report of the case on December 1, 2004. The general
report summarizes events relevant to the reorganization and
provides an audit of the Company's accounting and business
records.

CONTACT: Granito Serrano S.A.
         Sargento Cabral 2813
         Olavarria

         Mr. Rodolfo Marcelo Prat, Trustee  
         Vicente Lopez 2865
         Olavarria


MARMOLERIA SIERRA CHICA: Reports Submission Set
-----------------------------------------------
Mr. Hugo A. Trejo, the trustee assigned to supervise the
reorganization of Marmoleria Sierra Chica S.A., will present the
validated individual claims for court approval on November 5,
2004. These reports explain the basis for all accepted and
rejected claims. The trustee will also submit a general report
on December 20, 2004.

Infobae reports that Court No. 17 of Buenos Aires' Civil and
Commercial Tribunal has jurisdiction over this bankruptcy case.

CONTACT: Mr. Hugo A Trejo, Trustee
         Avda Cordoba 744
         Buenos Aires


METROGAS: Extends Solicitation of Debt Restructuring Approval
-------------------------------------------------------------
MetroGAS S.A. (the "Company") announced that it is further
extending its solicitation (the "APE Solicitation") from holders
of its 9-7/8% Series A Notes due 2003 (the "Series A Notes"),
its 7.375% Series B Notes due 2002 (the "Series B Notes") and
its Floating Rate Series C Notes due 2004 (the "Series C Notes"
and, together with the Series A Notes and the Series B Notes,
the "Existing Notes") and its other unsecured financial
indebtedness (the "Existing Bank Debt" and, together with the
Existing Notes, the "Existing Debt"), subject to certain
eligibility requirements, of powers of attorney authorizing the
execution on behalf of the holders of its Existing Notes of, and
support agreements committing holders of its Existing Bank Debt,
to execute an acuerdo preventivo extrajudicial (the "APE") until
5:00 p.m., New York City time, on August 2, 2004, unless further
extended by the Company.

APE Solicitation

As of 5:00 p.m., New York City time, on July 16, 2004, powers of
attorney and support agreements had been received with respect
to approximately U.S.$ 101,685,650 principal amount of Existing
Debt.

The APE Solicitation will remain in all respects subject to all
terms and conditions described in the Company's Solicitation
Statement dated November 7, 2003.

The Information Agent for the APE Solicitation outside Argentina
is GBR Information Services and its telephone number is (212)
644-1772. The Information Agent within Argentina is JP Morgan
Chase Bank Buenos Aires Branch and its telephone number is 5411-
4348-3475/4325-8046.

CONTACT:  MetroGAS S.A.                                  
          Pablo Boselli, Financial Manager                       
          E-mail: pboselli@metrogas.com.ar
          Tel: 5411-4309-1511

          Citigate Financial Intelligence
          Lucia Domville
          E-mail: Lucia.Domville@citigatefi.com
          Tel: 201-499-3548


PRODUCAMP S.A.: Court Appoints Trustee for Reorganization
---------------------------------------------------------
Producamp S.A, a company operating in Trenque Lauquen, is ready
to start its reorganization after the city's Court No. 1
appointed Ms. Graciela Esther Rea to supervise the proceedings
as trustee. Infobae states that Ms. Rea will verify creditors
claims until August 16, 2004.

CONTACT: Producamp S.A.
         Aristobulo del Valle 233
         Pehuajo

         Ms. Graciela Esther Rea, Trustee
         Monferrand 207
         Trenque Lauquen


SOLVENS S.A.: Liquidates Assets to Pay Debts
--------------------------------------------
Buenos Aires based Solvens S.A. will begin liquidating its
assets following the bankruptcy pronouncement issued by the
city's Court No. 12, reports Infobae.

The bankruptcy ruling places the company under the supervision
of court-appointed trustee, Mr. Hector Rodolfo Arzu. The trustee
will verify creditors' proofs of claims until September 3, 2004.
The validated claims will be presented in court as individual
reports on October 15, 2004.

The trustee will also submit a general report, containing a
summary of the company's financial status as well as relevant
events pertaining to the bankruptcy, on November 26, 2004.

CONTACT: Mr. Hector Rodolfo Arzu, Trustee
         Junin 55
         Buenos Aires


YESERIA LEZAMA: Enters Bankruptcy on Court Orders
-------------------------------------------------
Yeseria Lezama S.R.L. will enter bankruptcy protection after
Buenos Aires Court No. 1, with the assistance of Clerk No. 2,
ordered the company's liquidation. The order effectively
transfers control of the company's assets to the court-appointed
trustee who will supervise the liquidation proceedings.

Infobae reports that the court selected Mr. Juan Carlos Rico as
trustee. He will be verifying creditors' proofs of claims until
the end of the verification phase on September 24, 2004.

CONTACT: Mr. Juan Carlos Rico, Trustee
         Viamonte 1546
         Buenos Aires



===============
B A R B A D O S
===============

C&W BARBADOS: Regulator Rejects Rates Hike Proposal
---------------------------------------------------
Cable & Wireless Barbados failed in its bid to raise local phone
rates in the country after local regulator, Fair Trading
Commission (FTC), turned down the proposal on Tuesday.

Barbados Nation Online reports that FTC rejected the proposed
rate hike because the Company did not present sufficient proof
to warrant the increase. The regulator refuted the Company's
US$199.6 million cost estimate to operate the local telephone
network, saying that the actual cost is only US$177.6 million.

FTC also stressed the Company's failure to include mobile,
international and Internet service providers as relevant sources
of revenue for the domestic network as another reason for the
rejection.  

FTC deputy chairman Vivian-Anne Gittens said that "Without
information on the revenues due to the domestic service from
international and other sources [the commission] is not in a
position to determine the level of rate adjustment, if any, that
should be borne by the residential and business customer."

C&W Barbados asked for an increase in domestic line rates for
business and residential subscribers to recover US$24.7 million
of a US$29 million subsidy from its international business.



=============
B E R M U D A
=============

ANNUITY & LIFE: Clarifies Settlement Amount
-------------------------------------------
Annuity & Life Re (Holdings), Ltd. (NYSE: ANR - News) confirms
that the aggregate amount of the settlement in principle with
plaintiffs relating to the shareholder lawsuit pending against
it and certain of its present and former directors and officers
in the United States District Court for the District of
Connecticut is $16.5 million. Of this amount, Annuity & Life is
responsible for $5 million of which $2.5 million may be paid in
cash or stock at the election of the Company.


GLOBAL CROSSING: Slim Gets Regulatory Clearance to Up Stake
-----------------------------------------------------------
Mexican billionaire Carlos Slim Helu overcame the last remaining
obstacle to his plans to increase his 9.9% stake in Global
Crossing (NYSE: GLBCE), reports Dow Jones Newswires.

A spokeswoman from the Bermuda-based fiber optic network
operator revealed Wednesday that the public utilities commission
of Vermont, the last state that needed to sign off on Slim's
plan, has given its approval.

The Slim family filed with the Vermont Public Service Board in
May, seeking authority to acquire more than 10%, but less than
20%, of Global Crossing voting securities. At present, the Slims
hold 9.9% of Global Crossing's total equity. As of April 1, they
owned 11.25% of the company's publicly traded shares. The filing
said that the Slims intend to remain as passive investors.



===========
B R A Z I L
===========

EMBRATEL: Reports Earnings for the Quarter Ending June 30, 2004
---------------------------------------------------------------
Embratel Participacoes (BOVESPA: EBTP3, EBTP4) (the "Company" or
"Embrapar"); the Company holds 98.8 percent of Empresa
Brasileira de Telecomunicacoes S.A. ("Embratel"), announced
Wednesday earnings for the quarter ending June 30, 2004. All
financial figures are in Reais and based on consolidated
financial in "Brazilian Corporate Law.

HIGHLIGHTS

-- Net revenue was R$1.8 billion in the second quarter of 2004,
increasing 8.5 percent compared to the second quarter of 2003.
Compared to the first quarter of 2004, revenues declined 4.5
percent. Year-to-date total revenues were R$3.7 billion.

-- Local revenues represented 8.6 percent of total net revenues
in the second quarter of 2004. Quarter-over-quarter, local
services revenue rose 13.5 percent.

-- EBITDA in the second quarter of 2004 was R$347 million.
EBITDA was impacted by the revenue decline, as well as by non-
recurring items (see below for a detailed discussion.)

-- Net loss in the second quarter of 2004 was R$64 million.
Bottom line was also impacted by the devaluation of the currency
on our non-hedged foreign currency debt and by non-recurring
items.

-- Total debt remained flat at R$4.1 billion reflecting the
devaluation of the currency despite some debt repayment.

-- Total capital expenditures in the second quarter of 2004 were
R$191 million.

-- The administrative process on the withholding tax on outbound
remittances is practically terminated with a favorable outcome
to Embratel (see Other Information below.)

Note: Throughout this document, the second quarter 2003 income
statement was restated to reflect the reclassification of
certain expenses related to financial transactions, such as
taxes (PIS/Cofins on financial income and CPMF) and expenses,
such as bank expenses and letters of credit costs below the
operating line under the financial expense account. This
reclassification occurred in the third quarter of 2003.
Previously, these expenses were classified either as third party
or as taxes both under G&A expenses.

  VOICE SERVICES
  Domestic Long-Distance
  Year-over-year growth of 4.5%

Domestic long-distance revenue was R$978 million representing a
4.5 percent increase when compared to the second quarter of
2003. The year- over-year DLD revenue growth is explained by the
ability to participate in the SMP long-distance market and to
the substitution for advanced voice, which are under term
contracts.

Compared to the first quarter of 2004, domestic long-distance
revenues declined 9.8 percent. Competition and the introduction
of new anti-fraud practices resulted in loss of basic voice
traffic in the consumer segment. Another factor which
contributed to a lower domestic long-distance revenue was the
fact that the mobile industry is having difficulty billing
clients and Embratel is being affected.

The company continues to replace basic voice revenues with
advanced services and has continued to grow the number of 0800
and VipPhone clients. The number of VipPhone clients increased
10 percent quarter-over-quarter and more than 30 percent since
June 2003.

Year-to-date, domestic long-distance revenues were R$2.1
billion, representing an increase of 9.1 percent when compared
to the first half of 2003. The increase in revenues is
attributed to the entry into the SMP market and tariff
increases.

International Long-Distance

International long-distance revenue was R$188 million in the
second quarter of 2004, compared to R$215 million in the second
quarter of 2003, and R$203 million in the first quarter of 2004.
Competition (from legal and illegal providers), and less SMP
revenues (see above) were the main causes for the decline in the
second quarter of 2004.

International revenues accumulated in 2004 were R$391 million,
compared to R$441 million in the first-half of 2003.

  DATA COMMUNICATIONS
  Quarter-over-quarter growth of 4.1%

Embratel's data communications revenues were R$432 million in
the second quarter of 2004, compared to R$438 million in the
second quarter of 2003, and R$415 million in first quarter of
2004. The quarter-over-quarter 4.1 percent growth in data
revenues resulted from the higher wholesale revenues, as well as
to a short-term contract.

In the first six months of 2004, data revenues reached R$847
million, compared to R$893 in the prior year period. The decline
is mainly explained by price reductions and the termination of
the contract with UOL, an Internet service provider in the first
quarter of 2003 and the general downturn of the Internet
provider market.

During the second quarter of 2004, Embratel's free Internet
service provider, Click21(TM), launched its new portal with
exclusive content and a modern look & feel. It continued to grow
in usage hours and, less than a year after launch, it has passed
the mark of 900,000 subscriptions. With the success of Click21,
Embratel is rapidly building an important relationship tool, a
high-quality franchise and user base, which will be leveraged
for Embratel's broadband initiatives.

LOCAL REVENUE

Embratel ended the second quarter of 2004 with local revenues of
R$155 million, reflecting a substantial growth since a full-
blown commercial launch of the service in the second quarter of
2003 and a 13.5 percent increase relative to the prior 2004
quarter. This quarter-over-quarter revenue growth derives, not
only from the growth in the sale of Viplines, but also from
inbound interconnection revenues.

Year-to-date, local service revenues were R$291 million,
compared to R$25 million in the prior year period.

Embratel's local services continue to present a healthy growth.
Quarter- over-quarter, the number of Vipline clients rose 57.7
percent and the capacity made available to these clients has
increased 51.1 percent in the second quarter of 2004. The
service is being very successful with medium size companies.

Livre(TM), Vesper's first service launch with Embratel,
continues to have wide acceptance. Vesper's client base has
continued to grow. Vesper is currently launching "Livre 2 em 1."
This product allows the customer to have two telephone lines in
the same telephone equipment. The service allows the use of the
same phone in multiple locations -- such as at home and at work,
for example.

Sale of ADSL services over Embratel's own networks is now
available in selected areas of Porto Alegre and Rio de Janeiro.
These services are being provided to small businesses and the
high-end residential market.

  EBITDA
  Impacted by several non-recurring items

In the second quarter of 2004, EBITDA was R$347 million,
compared to R$391 million in the second quarter of 2003 and
R$448 million in the first quarter of 2004. EBITDA margin was
19.2 percent in the second quarter of 2004. EBITDA margin was
impacted by higher interconnection costs and non-recurring
payments and income.

Interconnection

Interconnection costs, as a percentage of net revenues, rose to
46.9 percent in the second quarter of 2004. The quarter-over-
quarter increase in interconnection costs is related to several
factors including: the increase in mobile interconnection in mid
February -- an average of 7.9 percent -- which affected the cost
of SMP traffic, as well as Vesper's local VC1 traffic cost and
higher settlement, which offset the decline in interconnection
due to lost traffic. The increase in telco ratio was also
impacted by the fact that some mobile interconnection payments
relate to the unbilled SMP revenues (see above.)

Note that due to the implementation of new systems, which have
enabled us to have a better visibility of the behavior of
certain components of our interconnection costs, some timing
adjustments, with no cash impact, were made to the
interconnection cost in the second quarter. As a result,
interconnection was understated in the first quarter of 2004,
and overstated in the second quarter of 2004. Thus, the year-to-
date telco ratio of 45.7 percent is a better indicator of the
telco run rate.

In Cost of Services, the "Other" category includes the costs of
handsets sold by Vesper. Embratel did not have this cost in 2003
and in the first quarter of 2004, the cost of handsets was
classified under SG&A. In the second quarter of 2004, Embratel
not only reclassified the handset cost relative to the first
quarter of 2004 in the "Other Cost of Services" line, but added
the handset cost relative to the second quarter cost 2004 per
se.

SG&A

SG&A, excluding personnel, remained flat quarter-over-quarter.
Third party expenses rose slightly and provision for doubtful
accounts was flat as a percentage of net revenue. Personnel
expenses were increased by a non- recurring R$92 million cash
expense related to the execution of "The Plan for Retention of
Executives and Strategic Persons," which was triggered by the
expected change of control.

Other operating income

EBITDA in the second quarter of 2004 benefited from several non-
recurring reversals. Embratel credited R$66 million (non-cash)
due to the reversal of a provision, which was constituted in the
second half of 2003l, and was intended to accommodate the risk
that the interconnection tariff adjustment would be based on
IGP-DI index, instead of the of the IPCA, as established by the
courts' stay. Embratel also recovered a credit of R$38 million
related to the excess payment of FUST. Based on an Anatel
decision, Embratel was granted the prerogative of making its
contribution to FUST net of the interconnection payments. Based
on this decision, Embratel recovered the payments made in excess
to FUST, as well as the corresponding interest for the period
(included in financial income -- see below) the excess funds
were retained by Anatel.

EBITDA accumulated in the first half of 2004 was R$796 million,
and considering the non-recurring itens was flat when compared
to the first half of 2003. EBITDA margin in the first six months
of 2004 was 21.5 percent.

Vesper impact on EBITDA

Vesper has continued to have a negative impact on EBITDA. In the
second quarter of 2004, Vesper had a negative EBITDA of R$36
million. Year-to-date, EBITDA loss has been R$59 million. Vesper
has accelerated its sale process by aggressively pricing
handsets to stimulate sales.

EBIT

EBIT was R$58 million in the second quarter of 2004, compared to
R$104 million in the corresponding 2003 quarter and R$155
million in the first quarter of 2004. The decline in EBIT
results from the decline in revenues, increase in
interconnection costs and the non-recurring items mentioned
above.

Year-to-date, EBIT was R$213 million, compared to R$203 million
in the first six months of 2003. This improvement results from
reduced interconnection costs and a lower allowance for doubtful
accounts.

NET INCOME

Embratel registered a net loss of R$64 million in the second
quarter of 2004 due to declining revenues, higher
interconnection costs, non-recurring retention expenses and
higher financial expenses due to a 6.8 percent devaluation of
the currency. Attenuating the loss were a non-recurring interest
income credit of approximately R$20 million recorded as
financial income on the FUST funds, not due but retained by
Anatel (see above), and an extraordinary non-operating income of
R$106 million related to a recovery of ILL tax inflationary
purges and the interest related to those amounts. On May 2004,
the Judge of the 26th Federal Court determined the final closure
of the process and, as a result, Embratel was able to record the
credit of the above mentioned amount (see financial statements
for further details on this matter.)

In the first six months of 2004, Embratel registered a loss of
R$60 million compared to profits of R$139 million in the same
period of the previous year.

FINANCIAL POSITION

Cash position on June 30, 2004, was R$969 million. During the
quarter cash was used for debt payment and retention
disbursements. Embratel ended the quarter with a total
outstanding debt of R$4.1 billion. Although debt repayment, net
of new debt (all related to the refinancing agreement) was of
approximately R$134 million, the impact of the 6.8 percent
devaluation of the Real relative to the US dollar increased the
debt level expressed in Reais. Net debt rose to R$3.2 billion,
increasing due to the uses of cash mentioned above. Short-term
debt (accrued interest, short-term debt and current maturity
long-term debt in the next 12 months) was R$1.3 billion.
Approximately 80.2 percent of short-term debt is either hedged
or in Reais (Exhibit 19.)

In the second quarter of 2004, Embratel rolled over the
remaining loan maturities, which were part of the Financing
Agreement signed in March of 2003.

RECEIVABLES

Embratel ended the second quarter of 2004 with a net receivable
balance of R$1.7 billion, flat relative to the prior 2004
quarter.

  (See exhibits 20 and 21.)

  CAPEX

Total capital expenditures in the quarter were R$191 million,
reflecting additional expenditure on Star One's satellite under
construction. The breakout of this expenditure is as follows:
local infrastructure, access and services -- 19.4 percent
(including PPIs and Vesper); data and Internet services -- 15.9
percent; network infrastructure -- 3.2 percent, others -- 17.6
percent and Star One -- 44.0 percent.

  OTHER INFORMATION
  Regulatory Agenda

During the quarter, Anatel issued regulation on line sharing
unbundling. Embratel believes this is an important step towards
leveling the competitive playing field and it will enable
Embratel to expand its addressable local market, offering
broadband, as well as internet and voice services.

Also during the quarter, Anatel ruled on the reduction in the
number of local areas from 7,600 to under 5,400. This will
enable Embratel to eliminate unprofitable short-distance long-
distance calls, while enlarging the addressable local market.
The reduction in the number of local areas will take place in
September of this year.

  Withholding Tax on Outbound Remittances -- Status Update

  Fact 1 -- Embratel was assessed by the "Receita Federal"
(Federal Revenue Agency), for the non-payment of income tax on
remittances of payments to foreign telecom operators. The
assessment amounted to R$411 million and corresponded to the
period between December 1994 and October 1998.

  Fact 2 -- In September 2002, the "Delegacia de Julgamento" of
the Federal Revenue Agency reduced the assessment to R$12.9
million.

  Fact 3 -- In December 2003, the "Conselho de Contribuintes"
(Tax Payer Council) of the Internal Revenue unanimously negated
the Federal Union's appeal to the former judgment by the
"Delegacia de Julgamento."

Given that on July 16, 2004, the Internal Revenue was formally
notified of the decision of the "Conselho de Contribuintes" and,
taking into consideration that such decision is unanimous and
there is no other decision from that "Conselho de Contribuintes"
with contradictory interpretation on a similar matter, there is
no legal basis for further appeals on this matter. The company's
legal advisors have good reason to believe that the decision of
the "Delegacia de Julgamento," reducing the assessment to R$12.9
million from the original R$411 million, is final.

Tariff Increases

Anatel approved tariff increases using the price adjustment
formula and IGP-DI index at the end of June. The approved rates
were as follows: domestic long-distance -- 3.2 percent increase;
international long-distance -- 8.22 percent decline; TU-RL --
10.5 decline; TU-RIU -- 3.2 percent increase. Subsequently, the
Supreme Court approved the IGP-DI as the index upon which to
base June 2003 tariff increases. This decision increases the
base tariff rate on which the 2004 increase will be applied,
however, actual implementation depends on the outcome of talks
with the Government. Since Embratel is an authorized local
service provider, its is not subject to the same local service
tariff adjustment ceiling applied to local service
concessionaires.

Embratel is the premier communications provider in Brazil
offering a wide array of advanced communications services over
its own state of the art network. It is the leading provider of
data and Internet services in the country and is well positioned
to be the country's only true national, local service provider
for corporates. Service offerings: include telephony, advanced
voice, high-speed data communication services, Internet,
satellite data communications, corporate networks and local
voice services for corporate clients. Embratel is uniquely
positioned to be the all-distance telecommunications network of
South America. The Company's network has countrywide coverage
with 28,868 km of fiber cables comprising 1,068,657 km of optic
fibers.

To see exhibits:
http://bankrupt.com/misc/Embratel_Participacoes.htm

CONTACT:  Silvia M.R. Pereira
          Investor Relations
          Tel: (55 21) 2121-9662
          Fax: (55 21) 2121-6388
          E-mail: silvia.pereira@embratel.com.br
                  invest@embratel.com.br


TCP: Analysts Estimate $12M Net Loss for 2Q04
---------------------------------------------
Brazilian mobile telephone company Telesp Celular Participacoes
(Sao Paolo: TSPP4.SA - NYSE:TCP) will report a net loss of BRL36
million (US$12 million) for the second quarter, according to the
average of five analyst forecasts collected by Reuters.

The expected figure would be in line with the BRL35.3-million
loss it made in the first quarter of this year, Reuters reports,
adding that the Company is due to post results early Friday.

Second quarter earnings before interest, taxes, depreciation and
amortization (EBITDA) are expected to rise 18% to BRL635
million, but the EBITDA margin is expected to ease to 34.6% from
35.5% last year.

UBS forecasts Telesp Celular attracted 913,000 new users during
the second quarter. That's almost one fifth of the 4.9 million
new mobile phones Brazil's National Telecommunications Agency
(Anatel) says came into operation in the three months.

TCP, which is part of the leading Vivo brand run by Spain's
Telefonica Moviles (Madrid:TEM.MC) and Portugal Telecom
(Interbolsa:PTCO.IN), ended the first quarter of 2004 with a net
debt of BRL4.2 billion.

CONTACT:  TELESP CELULAR PARTICIPACOES SA
          Rua Abilio Soares 409, - 10o andar
          Sao Paulo, 04005
          Phone: (212) 889-4350
          E-mail: webmaster@telespcelular.com.br
          Web Site: http://www.telespcelular.com.br



=========
C H I L E
=========

TELEFONICA CTC: Ratings Unaffected by 2Q04 Results
--------------------------------------------------
Compania de Telecomunicaciones de Chile S.A. (CTC, BBB/Watch
Neg/--), the largest Chilean telecommunications operator,
recently posted its second-quarter results.

EBITDA generation declined by 8.5% compared to second-quarter
2003 due to the reduction in the average fixed lines in service
(of 7.2% quarter over quarter), lower mobile margins due to the
industry's significant expansion, and the CPP tariff reduction
since February 2004. These factors were partially offset by the
increases in the mobile subscriber base and long distance
traffic and corporate revenues. Despite the decline in EBITDA,
financial measures remained solid due to the lower debt levels
as already incorporated in the current rating.

ANALYSTS: Ivana Recalde, Buenos Aires (54) 114-891-2127
          Marta Castelli, Buenos Aires (54) 114-891-2128  



===================
C O S T A   R I C A
===================

ICE: Government Sacks Two Directors
-----------------------------------
"I heard it on the news when I came back from vacation and heard
the President's declarations - I do not know the reason for
this," Mr. Jose Antonio Lobo said after he was fired from Costa
Rica's electrical and telecoms operator ICE, La Nacion reports.

Speculations abound that Mr. Lobo, and another ICE director, Mr.
Hernando Pantigoso were fired because of their alleged
involvement in a questionable US$120 million deal with Sweden's
Ericsson.

However, the Costa Rican government has declined to give further
details on the decision. President Abel Pacheco said that "It is
something to be careful with, we didn't want to make a mistake,"



=============
E C U A D O R
=============

* Fitch Ratings Affirms Ecuador At 'CCC+'; Outlook Stable
---------------------------------------------------------
Fitch Ratings, the international rating agency, affirmed
Ecuador's long-term foreign currency sovereign rating at 'CCC+';
the short-term foreign currency rating was affirmed at 'C'. The
Rating Outlook is Stable.

In spite of increases in economic growth and public sector
revenues related to higher oil production, fiscal and external
liquidity remains very tight in Ecuador. Given its lack of
access to capital markets and limits to multilateral financing
now that the IMF program has expired, the central government
faces a financing gap this year of 0.9% of GDP. For lack of
alternatives, the government will have to tap new oil revenues
meant to be used for net debt repurchases and also the social
security fund in order to meet its financing needs this year.
Should the central government deficit exceed the expected 1.6%
of GDP level, added pressure on fiscal balances could force
payment arrears. Scheduled bond interest is equal to about 2% of
GDP, more than half of which is on externally issued bonds. The
government is currently in arrears on certain salary payments
and to suppliers; there have been arrears to Paris Club
creditors within the last year.

Ecuador's low level of political institutionalization and weak
government leave it vulnerable to greater volatility in fiscal
outturns. The president has had great difficulty advancing
important structural reforms and budget legislation because he
has a very limited party base in Congress and does not score
high in recent popularity surveys. He has made mid-year wage and
pension concessions in response to public demonstrations, and
many of his cabinet members have resigned over the last eighteen
months under public pressure, including the recently departed
finance minister who had secured the last IMF program. The
fiscal cost of off-budget concessions is not yet clear, adding
to uncertainty about this year's financing gap.

While the economy should grow by about 5% this year on higher
oil production, quarterly growth should taper off sharply in the
fourth quarter (4Q) when the base effect from the opening of a
new pipeline in fourth-quarter 2003 (4Q'03) is complete. First
quarter growth of 5.9% was due almost entirely to the 46% growth
in the oil sector; the non-oil sector grew by a mere 1.2%. These
trends suggest that next year's overall growth may not exceed
2%. Without reforms to the regulatory framework for the oil
sector, continued rapid output growth is unlikely as foreign oil
firms have been reluctant to boost investment in new exploration
and production and their own fields due to legal uncertainty.
Production at government-owned Petroecuador fields has been
declining for the last decade owing to lack of investment and
difficulties in contracting with third-parties. Two bidding
rounds for private participation in government-owned fields
failed due to legal concerns. The non-oil sector will likely
remain sluggish until some progress is made to reduce high
energy and telecommunications costs by outsourcing management of
government monopoly companies and attracting new investment.
With the non-oil economy at a standstill and continued concern
about their ability to realize collateral, banks have not
increased credit to the private sector in real terms, in spite
of substantial liquidity.

Credit fundamentals could improve if the central government is
able to close the financing gap by entering into a new agreement
with the IMF, which would also allow for new program lending by
other multilaterals. An agreement would presumably be
accompanied by some progress on structural reforms, which could
boost growth prospects for next year as well. On the other hand,
the credit could come under pressure in the event of a
significant decline in oil prices or a change in government
outside of the election cycle. The former would reduce revenues
and the latter could result in higher than expected spending,
either of which could push the financing gap beyond tolerable
levels.

CONTACT:  Morgan C. Harting +1-212-908-0820
          Roger M. Scher +1-212-908-0240, New York

MEDIA RELATIONS: James Jockle +1-212-908-0547, New York



=========
H A I T I
=========

* IDB Offers $260M Soft Loans To Support Haiti's Recovery Plan
--------------------------------------------------------------
The Inter-American Development Bank expects to contribute around
$260 million in new soft loans to Haiti for the period 2004-
2006, IDB President Enrique V. Iglesias announced today at a
donor conference held in Washington, D.C. to raise financial
support for Haiti, the poorest country in the Western
Hemisphere.

The fresh resources would expand the IDB's existing loan
portfolio in Haiti, which includes around $340 million in
undisbursed financing for ongoing projects in key sectors such
as health, education, drinking water and sanitation,
agriculture, roads and basic infrastructure.

These projects dovetail with the political, economic and social
priorities established in the Interim Cooperation Framework
(ICF), an assessment of Haiti's most pressing development needs
for the next two years conducted by experts from donor
countries, multilateral agencies, civil society and the private
sector, under the leadership of the provisional Haitian
government.

"We firmly believe that fostering democracy, open political
dialogue and a development strategy centered on human
development, particularly in favor of the poor, is the right
path to a better future for Haiti," Iglesias said in his speech
at the World Bank, which co-hosted the donor meeting together
with the IDB, the European Commission and the United Nations.

Iglesias congratulated Haiti's interim prime minister, Gerard
Latortue, and his cabinet for the pragmatic approach with which
they devised the ICF, which gauged the country's overall
financing needs for the period between July 2004 and September
2006.

The programs and activities included in the ICF, which covers 20
priority sectors, have an estimated cost of $1.37 billion. Since
Haiti had already identified some $440 million available for
such projects, the July 19-20 donor conference sought to raise
more than $920 million in pledges to fill the financing gap.

In order to avoid repeating errors that foiled past
international attempts to aid Haiti, the new effort should
emphasize practical solutions to speed up the execution of
projects, strengthen the Haitian public sector and ensure
transparency and accountability in the use of funds, Iglesias
said.

In line with ICF goals of boosting job creation and generating
income for the poor, IDB-financed projects seek to employ labor-
intensive methods, for instance in public works to improve
roads. The IDB is also assisting the Haitian public sector to
strengthen its capacity to carry out crucial activities such as
administering public resources and collecting taxes.

The IDB, whose country office in Port au Prince remained in
operation throughout Haiti's recent crises, is also coordinating
its activities closely with donor nations and other multilateral
agencies to ensure an efficient and effective investment of the
international community's resources.

Besides thanking traditional donor countries and multilateral
agencies for responding so quickly to Haiti's plight, Iglesias
praised the efforts made by the Organization of American States
and the CARICOM Caribbean nations to preserve democracy in Haiti
and foster dialogue among the country's political factions.

He also highlighted how various Latin American countries have
taken the lead in the peacekeeping mission in Haiti, under the
auspices of the United Nations. Those same countries, he added,
are also ready to support Haiti's efforts to restore economic
growth and social justice.

CONTACT: Peter Bate
         Press and Information Officer
         Responsible for: Mexico, Central America,
                          the Dominican Republic and Haiti
         Tel. (202) 623-2609
         peterb@iadb.org


* Oxfam Warns Against Haiti Taking In More Loans
------------------------------------------------
British charity group Oxfam cautioned that the loans intended to
assist Haiti's recovery could drag the country deeper into debt
and poverty.  

Oxfam said in an Associated Press report that the loans pledged
at the international donors' conference on Tuesday were not
generous enough. The event generated pledges worth US$663
million in grants and US$422 million in loans for Haiti.       

International agencies like the World Bank and the Inter-
American Development Bank (IADB) has led the way in providing
much needed funding for Haiti. Mr. Lee Morrison from the World
Bank said that his agency has promised US$150 million in loans
and US$5 million in grants. Likewise, spokesman Peter Bate said
that IADB has allotted US$400 million for various projects for
the Caribbean nation, including US$7 million in grants.  



===========
M E X I C O
===========

CINTRA: IPAB Suspends Bidding Process
-------------------------------------
The Bank Savings Protection Institute (IPAB) plans to sit
through Mexico's air transport slump before deciding on the sale
of its interest in Cintra, the company that operates local
carriers Aeromexico and Mexicana.

Mr. Mario Beauregard, IPAB executive secretary, told El
Universal that plans to sell Cintra have been suspended due to
the crisis in the aviation industry. Company officials have said
that the present adverse conditions could reduce the Cintra's
value if the bidding process is opened this year.

IPAB expects to collect up to US$500 million from the sale of
Cintra once conditions in the air transportation industry
improve.


DESC: 2Q04 EBITDA Rises 58.1% Compared to 2Q03  
----------------------------------------------
Desc, S.A. de C.V. (NYSE: DES; BMV: DESC) announced Wednesday
its results for the second quarter ended June 30, 2004 (2Q04).
Except as noted below, all figures were prepared according to
generally accepted accounting principles in Mexico (Mexican
GAAP).

Unless otherwise noted below, the 2Q03 results have been
adjusted to exclude the financial figures for Desc's aluminum
wheel and adhesive and sealant businesses and the Chiluca real
estate project, which were sold in 2003.

Management believes that investors can better evaluate and
analyze Desc's historical and future business trends if they
consider results of operations without these divested businesses
and real estate project and, thus, unless otherwise noted
comparisons below are to the adjusted 2Q03 figures.

The results for 2Q04 demonstrate Desc's efforts under a strict
expense control to return to profitability by following its
strategic plan and focusing on its core businesses. This is
reflected in the strength of Desc's balance sheet as well as in
the stabilization of cash flows.

HIGHLIGHTS:

- Sales and exports were 11.7% and 15.3% higher, respectively,
when compared to 2Q03.

- Operating expenses reached 14.6% of sales, which represents a
reduction of 9.9% when compared
to 2Q03.

- EBITDA reached US$50 million, which represents an increase of
58.1% when compared to 2Q03.

- Volume and sales prices increased, which partially offset the
rise in raw material costs.

- There were significant improvements in Desc's financial
situation, such as a reduction in the debt level and an
optimization of its average cost of financing.

- Desc prepaid US$279 million of its debt, thereby reducing its
total debt by approximately 26.6%.

- Internal cash flow generation completely financed working
capital and part of the debt reduction.

EBITDA:

Consolidated EBITDA1 in dollars totaled US$50 million in 2Q04.
This represents a significant increase of 58.1% when compared to
2Q03 and a 27.3% increase in the first half of 2004 compared to
the same period in 2003, which reflects the improvement in all
of the sectors' results. In addition, it demonstrates that
results have stabilized during the last two quarters.

Operating Expenses

During 2Q04, there was a marked reduction in operating expenses
of 9.9% when compared to 2Q031, which is in-line with the goals
established at the beginning of 2004.

Debt Structure

During 2Q04, Desc's total debt declined by US$279 million, or
26.6%, when compared to 1Q04, from US$1,048 million to US$769
million. As a result of the proceeds from the capital increase
and cash generated by Desc's businesses, Desc made debt
prepayments totaling US$279 million.

The prepayments reduced net debt by approximately 25.7%, leaving
a
balance of US$733 million. Notably, in the last 18 months, the
total debt has decreased by US$409 million. These prepayments
were applied in the following manner:

- US$162 million towards long-term bank credit agreements,
- US$40 million towards revolving bank credit agreements (both
were part of the credit agreements restructured last December),
- US$74 million towards Desc's 8.75% coupon bond due October
2007, and US$3 million towards other credit agreements.

As of June 30, 2004, the total debt mix was 67% dollar-
denominated, 9% peso-denominated and 24% in UDIS and the debt
maturity profile was 95% long-term and 5% short-term. The
average cost of debt as of that date was 5.17% for the dollar-
denominated debt and 8.86% for the peso-denominated debt.

Financing expenses were US$15.3 million in 2Q04, which
represents a decline of 16.8% when compared to 1Q04. In
addition, due to debt prepayments, the new interest rate for
Desc's credit agreements restructured last December, applicable
as of 2Q04, are as follows:

- LIBOR + 250 basis points for the dollar debt facility,
- TIIE + 250 basis points for the peso debt facility,
- and LIBOR + 250 basis points for the revolving credit
facility.

Sales and Exports

During 2Q04, dollar-denominated sales increased 11.7% compared
to 2Q03, from US$446 million to US$498 million. Similarly, there
was an increase of 10.1% in dollar-denominated sales during the
first half of 2004 when compared to the first half of 2003.

Total exports totaled US$241 million in 2Q04, which represents
an increase of 15.3% when compared to 2Q03. The main drivers
were the increases in export sales in the Automotive, Chemical
and Food sectors, which were 4.0%, 33.4% and 18.6%,
respectively, higher than in 2Q03. For the first half of 2004
compared to 2003, the increase was 12.2%.

Operating Income

Consolidated operating income in dollars posted a notable
increase in 2Q04 totaling US$21 million, which is US$19 million
higher than in 2Q03 and US$23 million higher than in the first
half of 2003.

RESULTS BY SECTOR

Automotive Sector

Sales in 2Q04 reached US$29 million, equivalent to a 9.4%
increase compared to the previous quarter. 2Q04 revenue
decreased 9.9% in comparison to 2Q03.

Sales for 2Q04 were attributable to the following projects:

1. Punta Mita = 74.8%
2. Santa Fe Shopping Center Reserve = 20.4%
3. Bosques de Santa Fe = 4.8%

Operating income totaled US$6 million in 2Q04, compared to the
loss recorded in 2Q03.

The Punta Mita project continues enjoying excellent acceptance
in the market. During the second quarter, Desc sold a beachfront
lot, three golf course lots and six villas. In addition,
negotiations were completed for the sale of land in front of the
golf course for the development of 125 villas, which will be
developed over the next five years.

The three remaining lots in the Santa Fe Shopping Center Reserve
were sold, leaving no remaining lots for sale.

In Bosques de Santa Fe, practically no single-family lots remain
in inventory, while 18 residential lots and approximately 200
multi-family units remain for sale.

To see financial statements: http://bankrupt.com/misc/DESC.htm

CONTACT: Desc Sociedad de Fomento Industrial SA de CV
         Paseo de los Tamarindos 400-B
         Bosques de las Lomas
         Mexico, D.F.,  05120
         Phone: (525) 261-8000
         Fax: (525) 261-8096
         Web Site: www.desc.com.mx


GALEY & LORD: Agrees To Acquisition By Patriarch Partners
---------------------------------------------------------
Galey & Lord, Inc., a leading global supplier of denim, khaki
and corduroy fabrics for the fashion apparel and uniform
markets, announced it has agreed to be acquired by Patriarch
Partners, LLC, a New York-based financial firm with
approximately $4 billion under management and significant
investments in textile industry companies. Galey & Lord's board
of directors approved the offer and the company is in the
process of presenting the acquisition plan to stakeholders.
Financial terms were not disclosed.

Galey & Lord is privately held following its emergence from
bankruptcy protection in March of 2004. The company's lenders
must approve the transaction.

"This transaction is an important milestone in the evolution of
Galey & Lord, which has taken significant steps to compete in a
changing market and amidst increased global competition," said
John J. Heldrich, President & C.E.O. of Galey & Lord.

"Patriarch Partners is a highly-regarded strategic investor with
a proven track record of enhancing the value of companies in our
industry," he continued. "They are committed to working with
management to execute a long-term vision that will enable us to
build toward a successful future. This sends a message to our
customers, vendors, employees and strategic partners that the
company is taking steps necessary to realize its strategic
vision, allowing it to prosper as we move forward."

"Galey & Lord has a long history of providing quality,
innovation and reliability to a strong customer base that
includes all of the major retailers and garment manufacturers in
its markets," said Lynn Tilton of Patriarch Partners. "The
company is an important player in an industry that continues to
undergo major change.

"We have held a significant stake in the company's equity and
debt for some time. We know the company and feel comfortable
with its market position and its strong management team," she
continued. "During these challenging times, we are confident in
our ability to make a difference. Our goal is not only to help
the company achieve stability, but bring to bear the necessary
resources for Galey & Lord to achieve long term success."

Galey & Lord, Inc. operates domestically and in Canada under two
divisions, Swift Denim and Galey & Lord Apparel, and
internationally through joint ventures in Europe, North Africa,
Asia and Mexico. Its customers include: Gap, Old Navy, Banana
Republic, Polo Ralph Lauren, Abercrombie & Fitch, Levi's, Tommy
Hilfiger, L.L. Bean, Nautica, Eddie Bauer, Liz Claiborne,
Haggar, Land's End, and Tropical Sportswear / Savane, among
others. The company is responding to increased low-cost
competition by leveraging its historic core competencies as a
differentiated, value-added product innovator, while improving
production efficiencies and creating competitive advantage via
speed to market.

About Patriarch Partners

Patriarch Partners, LLC (together with its affiliates,
"Patriarch") manages seven CDOs, two CLOs, and a private equity
fund and currently oversees lending to more than 400 companies.
Patriarch's assets under management approximate $4 billion,
including significant equity positions in over 50 companies.

Patriarch has developed a strong reputation for investing in and
improving the value of companies during periods of operational,
industry and economic turmoil.

About Galey & Lord

Galey & Lord Apparel is a leading producer of innovative woven
sportswear fabrics as a result of its expertise in sophisticated
fabric finishing and close design partnerships with its
customers. Swift Denim is a leading producer of differentiated
and value- added denim products supplying top designers and
retailers around the world.

Galey & Lord, Inc. and its foreign subsidiaries employ
approximately 3,200 employees in the United States in North
Carolina, South Carolina, Georgia, and New York. It employs more
than 200 employees in its owned foreign operations. The company
and its joint venture interests operate in the U.S., Canada,
Mexico, Asia, Europe and North Africa.


GRUPO MEXICO: Workers to Walk Off the Job Friday
------------------------------------------------
Workers at Grupo Mexico's Cananea copper mine said they will
lodge a strike Friday if the Company won't yield to their
demands.

The schedule is an extension to Monday's deadline, which was
originally set by the National Mining, Metallurgical and Similar
Workers Union.

Dow Jones recalls that workers at Cananea, in northwestern
Sonora state, are demanding profit-sharing, payment of overtime
and temporary promotions, as well as improved safety measures
and a return in the size of work crews to between 11 and 14
workers from the current six or seven. These demands are similar
to those presented by workers at Grupo Mexico's La Caridad
complex who went on strike July 12.

Talks between the Company and the mines' workers are continuing.

Meanwhile, workers at Grupo Mexico's zinc refinery in San Luis
Potosi state are also threatening to strike Friday unless their
demands are met.

CONTACT:  Mr. German Larrea Mota Velasco
          Chairman & CEO
          GRUPO MEXICO
          Av. Baja California No. 200
          Colonia Roma Sur
          06760 Mexico, D.F.
          Tel. Conm. 52 (55) 5080-0050


HYLSAMEX: Prepays $137M Bank Loan
---------------------------------
Mexican steel maker Hylsamex (HYLSAMXL.MX) reduced its net debt
after it prepaid a US$137-million bank loan using funds raised
recently from a share issue.

The Company announced last week it could raise up to US$144mn in
its issue of L series shares, which are convertible into normal
B series shares and carry voting rights after being listed on
the bourse for one year.

Hylsamex is taking advantage of a spike in global steel prices
stemming in part from a recovery of the U.S. economy to sort out
its debt-laden balance sheet after struggling to make a profit
for several years.

"Net debt at June 30, considering this prepayment, was $730
million, compared to $962 million at the end of March, and
$1.014 billion at the close of 2003," Hylsamex said in a
statement.

"In coming quarters, the company expects to continue generating
free cash flows to carry out additional debt reductions,"
Hylsamex said.

Mexican conglomerate Alfa is in the process of spinning off its
ownership of Hylsamex, which sold 2.89Mt in steel last year.

CONTACT:  Hylsamex S.A. de C.V.
          101 Ave Munich Cuauhtemoc
          66452 San Nicolas de los Garza
          Nuevo Leon
          Mexico
          Phone: +52 81 8865 2828
          Fax: +52 81 8865 1210
          Home Page: http://www.hylsamex.com.mx
          Contact:
          Engr. Dionisio Garza Medina, Chairman
          Alejandro Elizondo Barragan, Chief Executive Engr



===============
P A R A G U A Y
===============

COPACO: New Head Names New Senior Management Team
-------------------------------------------------
Paraguay's state-owned telecoms operator Copaco doesn't just
have a new president, it also has a new senior management team.

Business News Americas reports that Mr. Omar Ramos, who recently
took over the helm of the telecom outfit after accounting
irregularities led to the ouster of the Company's former
president, replaced the entire senior management team.

Mr. Ramos appointed Mr. Carlos Coronel as executive manager, Mr.
Hector Raul Vega as technical manager and Mr. Osmar Lopez Zayas
as commercial manager.

The replacements are part of the Company's efforts to put an end
to allegations of corruption, which led to the exit of former
company president Mr. Juan Francisco Godoy.



=======
P E R U
=======

AERO CONTINENTE: Transfers Ownership to Employees
-------------------------------------------------
Peru confirmed Wednesday that the country's largest airline,
Aero Continente SA, has transferred ownership to its workers,
making it easy for the airline to obtain a new insurance.

"I have been officially informed that the company has
transferred 100% of its capital from the sale of shares to the
company's employees," Transportation and Communications Minister
Jose Ortiz told a commission of Congress.

The latest move, according to the minister, would allow the
airline to get insurance "without further difficulties."

Peru grounded Aero Continente more than a week ago, saying it
had failed to obtain a new insurance policy after the U.S.
government last month placed its founder on a list of overseas
drug kingpins.

However, the employee-owned airline will have to resume
operations under the name Nuevo Continente (New Continent), the
minister added.



=============
U R U G U A Y
=============

BBVA URUGUAY: S&P Ups Ratings Following Sovereign Upgrade
---------------------------------------------------------
Standard & Poor's Ratings Services raised its long-term local
and foreign currency counterparty credit rating on Banco Bilbao
Vizcaya Argentaria Uruguay S.A. to 'B' from 'B-' as a result of
the upgrade of the local and foreign currency ratings of the
Oriental Republic of Uruguay. The short-term rating on the bank
was raised to 'B' from 'C'. The outlook on the bank's long-term
counterparty credit rating remains stable, reflecting the
outlook on the Uruguayan sovereign ratings.

"The financial system's operating environment has been gradually
improving since the 2002 crisis, and the rated Uruguayan banks
enjoy comfortable liquidity positions," said Standard & Poor's
credit analyst Carina Lopez. "On the negative side, slow lending
activity is likely to remain the rule until uncertainties
regarding the upcoming administration's economic policies
diminish."

In turn, the sovereign upgrade reflects ongoing expenditure
restraint that, coupled with an improving economy, will underpin
a further reduction in the fiscal deficit and debt stock. It
also incorporates the expectation that sufficient policy
continuity under the next government will keep Uruguay's fiscal
trajectory on an improving trend in 2005 and beyond.

The stable outlook reflects the outlook on the Uruguayan
sovereign ratings, which balances the risk that Uruguay will be
able to deepen fiscal adjustment in the context of a modest
medium-term growth trajectory.

ANALYSTS:  Carina Lopez, Buenos Aires (54) 11-4891-2118
           Ursula M Wilhelm, Mexico City (52) 55-5081-4407  


CITIBANK N.A.: S&P Upgrades Ratings to `B' from `B-'
----------------------------------------------------
Standard & Poor's Ratings Services raised its long-term local
and foreign currency counterparty credit rating on Citibank N.A.
(Uruguay Branch) to 'B' from 'B-' as a result of the upgrade of
the local and foreign currency ratings of the Oriental Republic
of Uruguay. The short-term rating on the bank was raised to 'B'
from 'C'. The outlook on the bank's long-term counterparty
credit rating remains stable, reflecting the outlook on the
Uruguayan sovereign ratings.

"The financial system's operating environment has been gradually
improving since the 2002 crisis, and the rated Uruguayan banks
enjoy comfortable liquidity positions," said Standard & Poor's
credit analyst Carina Lopez. "On the negative side, slow lending
activity is likely to remain the rule until uncertainties
regarding the upcoming administration's economic policies
diminish."

In turn, the sovereign upgrade reflects ongoing expenditure
restraint that, coupled with an improving economy, will underpin
a further reduction in the fiscal deficit and debt stock. It
also incorporates the expectation that sufficient policy
continuity under the next government will keep Uruguay's fiscal
trajectory on an improving trend in 2005 and beyond.

The stable outlook reflects the outlook on the Uruguayan
sovereign ratings, which balances the risk that Uruguay will be
able to deepen fiscal adjustment in the context of a modest
medium-term growth trajectory.

ANALYSTS:  Carina Lopez, Buenos Aires (54) 11-4891-2118
           Ursula M Wilhelm, Mexico City (52) 55-5081-4407  


DISCOUNT BANK: Ratings Raised Following Sovereign Upgrade
---------------------------------------------------------
Standard & Poor's Ratings Services raised its long-term local
and foreign currency counterparty credit rating on Discount Bank
Latin America S.A. to 'B' from 'B-' as a result of the upgrade
of the local and foreign currency ratings of the Oriental
Republic of Uruguay. The short-term rating on the bank was
raised to 'B' from 'C'. The outlook on the bank's long-term
counterparty credit rating remains stable, reflecting the
outlook on the Uruguayan sovereign ratings.

"The financial system's operating environment has been gradually
improving since the 2002 crisis, and the rated Uruguayan banks
enjoy comfortable liquidity positions," said Standard & Poor's
credit analyst Carina Lopez. "On the negative side, slow lending
activity is likely to remain the rule until uncertainties
regarding the upcoming administration's economic policies
diminish."

In turn, the sovereign upgrade reflects ongoing expenditure
restraint that, coupled with an improving economy, will underpin
a further reduction in the fiscal deficit and debt stock. It
also incorporates the expectation that sufficient policy
continuity under the next government will keep Uruguay's fiscal
trajectory on an improving trend in 2005 and beyond.

The stable outlook reflects the outlook on the Uruguayan
sovereign ratings, which balances the risk that Uruguay will be
able to deepen fiscal adjustment in the context of a modest
medium-term growth trajectory.

ANALYSTS:  Carina Lopez, Buenos Aires (54) 11-4891-2118
           Ursula M Wilhelm, Mexico City (52) 55-5081-4407  


* S&P Raises Uruguay's Long-Term Ratings to 'B' From 'B-'
---------------------------------------------------------
Standard & Poor's Ratings Services raised its long-term foreign
and local currency sovereign credit ratings on the Oriental
Republic of Uruguay to 'B' from 'B-'. The short-term ratings
were raised to 'B' from 'C'. The outlook on the long-term
ratings is stable.

"The upgrades reflect ongoing expenditure restraint that,
coupled with an improving economy, will underpin a further
reduction in the fiscal deficit and debt stock," said Standard &
Poor's Ratings Services credit analyst Lisa Schineller. "The new
ratings also incorporate the expectation that sufficient policy
continuity under the next government (presidential elections
will be held in October/November 2004) will keep Uruguay's
fiscal trajectory on an improving trend in 2005 and beyond," she
added.

Standard & Poor's projects the general government fiscal deficit
to decline to 3.8% of GDP in 2004 from 4.7% in 2003. The
improvement reflects the government's expenditure restraint amid
the strong pick-up in revenue associated with real GDP growth
projected at 8.5% this year. This commitment to fiscal
discipline occurred despite the upcoming presidential and
legislative elections. Standard & Poor's expects the government
to satisfy its nonfinancial public sector primary (noninterest)
surplus target with the International Monetary Fund (IMF) of
3.2% of GDP, which is consistent with a general government
primary surplus of 2.1% of GDP.

"Uruguay's creditworthiness, however, is constrained by a high
debt burden: net general government debt is projected at 82% of
GDP in 2004," explained Ms. Schineller. "A significant 95% of
the government's debt is denominated in foreign currencies and
75% is owed to nonresidents, further straining fiscal
flexibility. Since almost half the government's debt is owed to
official creditors, Standard & Poor's expects the next
government to negotiate a follow-up to the Stand-by Arrangement
with IMF that expires in March 2005 to ensure continued access
to multilateral financing over the medium-term," she said.

Ms. Schineller explained that, in addition to official funding,
some recourse to market financing (rollovers in the local
market, and placements in local and external markets) is still
needed to cover financing needs-despite the improvement in the
government's amortization profile following the 2003 distressed
debt exchange. Investor confidence will depend upon policies to
improve the competitiveness of the Uruguayan economy and to
raise its primary fiscal surplus toward 4% of GDP over the
medium term. This policy stance could prove politically
challenging, given a short track record of running primary
surpluses that only began in 2003 and uncertain medium-term
growth prospects.

"The stable outlook balances the risk that Uruguay will be able
to deepen fiscal adjustment in the context of a modest medium-
term growth trajectory," Ms. Schineller noted. "Progress on, or
meaningful prospects for, reform (including those required by
multilateral creditors) to enhance growth prospects and fiscal
flexibility would improve creditworthiness. The ratings could
come under downward pressure if Uruguay's commitment to a tight
fiscal stance weakens and/or adherence to the terms and
conditions of multilateral programs falters," she concluded.

ANALYSTS:  Lisa M Schineller, New York (1) 212-438-7352
           John Chambers, CFA, New York (1) 212-438-7344  



=================
V E N E Z U E L A
=================

PDVSA: S&P Says PDVSA Fin Ltd. Notes Cut Probable
-------------------------------------------------
Standard & Poor's Ratings Services announced Wednesday that it
expects to downgrade PDVSA Finance Ltd.'s outstanding debt upon
the completion of the tender and consent offer that was proposed
by Petroleos de Venezuela S.A. (PDVSA) June 28, 2004. Subject to
successful completion of the tender and consent solicitation,
Standard & Poor's expects that it will lower its rating on the
PDVSA Finance notes to 'B' from the current rating of 'B+' and
remove it from CreditWatch with negative implications, where it
was placed June 28, 2004. The expected downgrade stems from
Standard & Poor's view that amendments to be made to the
transaction upon completion of the tender will reduce the
structural protection afforded to investors who continue to hold
PDVSA Finance debt.

The tender and consent offer by PDVSA--the national oil company
of Venezuela--requires all noteholders tendering their notes in
return for the purchase price to agree to certain amendments to
the current PDVSA Finance transaction terms. All holders of
notes that remain outstanding after completion of the tender
will be bound by these amendments. For purposes of obtaining
approval for the amendments and proposed waivers, noteholders of
all series of notes vote as a single class. Adoption of the
proposal requires the affirmative vote of the holders of a
majority of the principal amount of notes outstanding. The key
amendments and waivers proposed include:

-- The removal as designated obligors of certain key companies
affiliated with PDVSA, including Citgo Petroleum Corp. and
Hovensa LLC;

-- A reduction in the required monthly average and percentage
amount of export receivables sold through the PDVSA Finance
transaction to 4.5 million barrels of crude oil of less than 30
degrees American Petroleum Institute (API) gravity from 27
million barrels and to 40% from 80% of total sales of oil that
is less than 30 degrees API gravity, respectively;

-- A change in the definitions of "specified events" and "events
of default" to incorporate the sale requirement changes
mentioned above; and

-- A potential reduction in the provision of accounting and
other financial information currently provided under SEC rules
should PDVSA Finance not be subject to these disclosure
requirements in the future.

Upon the conclusion of the early tender period that ended July
12, 2004, PDVSA announced that nearly 96% of the $2.6 billion in
debt had been tendered, with approximately $110 million in debt
still outstanding.

Although debt service coverage will increase significantly after
the expected completion of the tender offer, Standard & Poor's
believes that the credit quality of the transaction will decline
somewhat due to greater potential supply diversion risk,
decreased transparency with respect to PDVSA's physical and
financial operations (especially should the company de-register
the PDVSA Finance transaction), and the more general trend
toward greater political interference in the operations of PDVSA
by the government. In particular, the enhanced ability of PDVSA
to sell its oil exports to buyers who are not designated
customers will, in Standard & Poor's view, increase the risk of
a debt service payment shortfall should oil prices decline
sharply and/or if the company should suffer another sharp drop
in exports as occurred during the labor strike of late 2002 to
early 2003. During that strike, oil supplies to non-PDVSA-
affiliated customers dropped severely, as PDVSA prioritized the
sale of its limited supplies to its own affiliates over
nonaffiliated customers.


PDVSA: Demands an Independent Audit, Arbitration in SAIC Dispute
----------------------------------------------------------------
In a briefing Wednesday, top officials of the Venezuelan oil and
gas concern PDVSA (Petroleos de Venezuela, S.A.) said the
company's commercial dispute with the San Diego firm Science
Applications International Corporation should be put before an
independent international arbitrator, rather than be subject to
political pressures in Washington.

The dispute between PDVSA and SAIC pertains to their joint
ownership of an information technology firm called INTESA that
was designed to provide outsourced IT services to PDVSA and
potentially others in Latin America.

"This case must be resolved by independent international
arbitration, the course of action that was agreed to in
contracts signed by PDVSA and SAIC," said Rodolfo Porro, General
Counsel of PDVSA, in a background briefing entitled "PDVSA vs.
SAIC: Myths and Truths of the Commercial Dispute." Last week,
the U.S. Overseas Private Investment Corporation announced it
had decided in favor of SAIC in this matter and asserted that
PDVSA and the Government of Venezuela had expropriated SAIC's
investment in Venezuela.

In reviewing key details of the PDVSA/SAIC commercial dispute,
Porro explained that SAIC has refused to provide for a certified
financial audit of INTESA's books. "This is particularly
important because the outside auditors of INTESA have refused to
certify the validity of INTESA's financial statements for 2002.
PDVSA for its part cannot pay SAIC or any entity based solely on
guesswork and unaudited financial data."

Porro said there has been no expropriation and that SAIC's claim
before OPIC was false. "OPIC found in favor of SAIC, but in a
process in which PDVSA never even had the opportunity to review
SAIC's submission. OPIC's decision simply ignored the facts of
this case that were presented by PDVSA."

Porro also alleged that some OPIC officials may have had a
political agenda in assisting SAIC with their efforts against
PDVSA. "It is important to note that the person within OPIC who
validated the SAIC claim previously worked at a company that
itself had a joint venture with SAIC," he said.

Throughout the process at OPIC, OPIC has tried to pressure PDVSA
to pay SAIC before a final determination could be reached in
order to avoid issuing a final determination in this matter.
Porro said, "We simply cannot be coerced. PDVSA has a public
reputation to preserve and we cannot pay money that is not
validly due."

The OPIC decision highlighted the fact that PDVSA suspended
remote access to its IT systems during a nationwide work
stoppage in December 2002/January 2003 that paralyzed the
petroleum sector. "This was a security measure that was critical
given the magnitude of the crisis we faced and the risks posed
to us. Remote access was deactivated not only for the workers at
INTESA but for everyone who had remote access. It was
deactivated specifically because as PDVSA was trying to operate
its systems, we were experiencing interruptions of service that
were being perpetrated by remote access. It was absolutely
essential to suspend this mechanism so that we could control our
IT operations," he said, adding: "Any security expert would
agree with this. It is incredible that OPIC never mentioned that
these were taken as essential security measures."

Commenting on the case, the Ambassador of the Bolivarian
Republic to the United States, Bernardo Alvarez Herrera,
indicated that "the allegation that the assets of INTESA were
confiscated by PDVSA is totally inaccurate; such actions are
expressly prohibited by the Venezuelan constitution."

At the same time, the Ambassador commented on the importance of
the U.S.-Venezuelan bilateral relationship. PDVSA is an
important investor in the United States through its subsidiary
CITGO, one of the largest U.S. oil refiners with 13,500 service
stations, $12 billion in U.S. investment and more than 150,000
direct and indirect employees, he noted.

Ambassador Alvarez continued, "In the energy sector, Venezuela
exports 1.44 million barrels of oil each day to the United
States and buys $3.5 billion dollars each year in goods and
services from more than 800 U.S. companies. There are more than
100 U.S. and international firms, with more than $25 billion in
investment in the Venezuelan energy sector and an additional $14
billion expected in the near future. This is evidence that the
allegations of SAIC represent an isolated experience and that
OPIC's assertion has no relationship to the actual investment
climate in Venezuela, where foreign investors can invest with
confidence because of a secure legal investment infrastructure."

Thomas Wilner, the outside counsel to PDVSA on this matter who
is a partner with the prestigious law firm of Shearman &
Sterling, commented on the OPIC's memorandum of determination in
this case: "This is one of the strangest decisions that I have
seen in more than 30 years of practicing law in Washington.
There is no basis for this decision in either the facts or in
the law. The OPIC decision has no merit whatsoever."

Wilner also commented that he was "surprised by the enormous
political pressure that has been put on PDVSA and Venezuela from
the highest levels of the U.S. Government for what is such a
modest commercial dispute. One must wonder where this political
pressure comes from and why the U.S. relationship with a country
that supplies nearly 15 percent of our oil imports can be held
hostage to such a minor commercial dispute."

Wilner added, "As a U.S. citizen I am frankly offended to see
that our tax dollars can be used to pay fraudulent claims to
companies with powerful political connections. How could OPIC
have paid this claim when there has never been a financial
audit?"

Each of the Venezuelan spokespersons, who were in Washington for
high level meetings with representatives of the U.S. business,
government and financial communities, ended by reiterating the
longstanding commitment that Venezuela has had, and will
continue to have, with the foreign investor community and to the
continued fulfillment of the contractual obligations of
Venezuela that are designed to benefit commercial relations with
the United States and the rest of the world, broadly speaking
and in particular in the energy sector.


Bernardo Alvarez, ambassador of the Bolivarian Republic of
Venezuela to the United States said:

"The more than 100 international companies, including many U.S.
firms - with more than $25 billion in investment in the
Venezuelan energy sector and another $14 billion in investments
expected in the near future, are evidence that the case of SAIC
is an isolated incident that does not reflect the general
climate of confidence and security of these international firms
as investors in Venezuela."

Thomas Wilner, partner, Shearman & Sterling, LLP added:

"As a U.S. citizen, I am frankly offended to see that our tax
dollars can be used to pay fraudulent claims to companies with
powerful political connections. How could OPIC have paid this
claim when there has never been a financial audit?"

CONTACT: PETROLEOS DE VENEZUELA, S.A.
         Tom Wilner, 202-508-8050
         Stephanie Silverman, 202-466-8700


PDVSA: Explosion at Natural Gas Complex Injures Four
----------------------------------------------------
Four PDVSA workers were injured Wednesday by an explosion at the
Company's Santa Rosa natural gas complex in the Anaco natural
gas district.

Citing Frank Diaz, the head of the fire department for
Anzoategui state, the Associated Press reports that the blast
occurred around noon, and that the fire department has put out a
fire caused by the explosion.

PDVSA said the incident did not cause any production problems
because the explosion occurred at a unit that was not in use.

"It is important to point out that that the incident did not
affect operational or production activities, because the heater
was out of service and separated from oil installations," said
the statement.

PdVSA said it was dismantling the obsolete heater to build more
modern facilities when the blast occurred.



                            ***********


S U B S C R I P T I O N   I N F O R M A T I O N

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